Logistics index maintains momentum

The Stifel Logistics Confidence Index maintained its momentum as the global economy enters the second half of 2013. Compiled by Transport Intelligence, the overall index, which combines the current situation with future expectations, increased 0.7 points from 51.4 in June to 52.1 in July. This is the sixth consecutive month the index registered above the 50 threshold, indicating increasing optimism in the overall European freight forwarding market.

Europe continues to dig itself out of its economic hole as manufacturing activity inches up closer to the 50-level that denotes expansion. Additional data further supports improvements within the region as consumer spending rose 1.0% in May and business confidence, while still negative, recorded a 15-month high in May.

The freight market is also displaying some signs of improvement. IATA’s May report indicated freight-ton-kilometers increased 0.8% year-over-year. Meanwhile, overcapacity continues to be a major concern for sea freight operators; however, evidence suggests recent rate hikes appear to be holding which bodes well for carriers, but may prove troublesome for shippers.

Still, the sea freight index for the logistics situation increased 0.7 points to 48.9 for July. Meanwhile, the index for air freight noted an increase to 43.6, up 1.6 points from June. Although both the air and sea indices remain below the 50-level threshold, the improvements can probably be attributed to seasonal rebounds in volumes as “peak season” gets set to begin. In addition, Samsung noted since the end of April, its latest smartphone has surpassed 20m shipments.

While improvements appear to be underway, in this month’s unique question, we asked survey participants if they believe the airfreight market is stabilising. The results were mixed and it seems uncertainty persists. 34.3% of respondents indicated they do believe the market is stabilising, while 39.3% said it was not; 26.2% were unsure. Comments included “some companies are switching to ocean freight to reduce cost and green initiatives” and “We are seeing less volatility, fewer supplier issues (lift, fuel surcharge issues, pricing issues) and more predictability”. Several comments also noted concerns that rising fuel prices may slow any possible increases in airfreight.

The six month outlook continues to be bright. European forwarders remain positive as they anticipate improving volumes. This is indicative of the index for logistics expectations which increased 0.4 points to 58.0.

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About the Stifel Logistics Confidence Index

To get a better view of global air and ocean trade, Stifel has partnered with Transport Intelligence to create the Stifel Logistics Confidence Index (LCI), a monthly survey of international shippers and forwarders that measures freight activity across several European-based trade lanes.